Thomas Gayner

[Dexter]

Thought I'd kick off this category with an excellent investor and capital allocator: Thomas Gayner, co-Chief Executive Officer of Markel Corp.

Recently, Tom gave an excellent interview to Value Investor Insight (VII), and I thought I would share it with the group.  Here's a link to the interview:

http://www.valueinvestorinsight.com/pdfs/TrialAPR2016.PDF

In this interview Tom described his investment process, as follows: "We're looking for profitable businesses with good returns on capital at modest leverage, that have honest and talented management, that have reinvestment opportunities and capital discipline, and that have shares trading at fair prices." 

Tom also provided some commentary on The Walt Disney Company, Brookfield Asset Management, Diageo, and Nestle in this VII interview.

I found one passage of the interview especially interesting.  In it, Tom Gayner said: "We were buyers...and at the end of the year owned core positions in Alphabet, Amazon and Facebook.  Ten years ago I wouldn't have owned any of them, but given the winner-take-all elements of their businesses you can credibly think about how durable the franchises are and how much runway they have ahead. At the end of last year Alphabet had $73 billion of cash on its balance sheet. People say, 'Oh, but a lot of that is trapped overseas,' to which I say, so what? It's $73 billion! This is an immense cash-generating machine at the top of the food chain in the world of data, which as everything becomes more and more digital becomes more and more valuable over time. I'd also add that each of these companies has young, founder visionaries who have already demonstrated remarkable success. That fits very well with how we invest."

Tom Gayner's change in attitude regarding tech companies is pretty incredible.  Most value investors claim that they can't invest in tech because of the constant change, brutal competition, and disruption inherent in the industry.  But here is a stalwart value investor stating that he is now willing to own certain technology companies (whereas 10 years ago, he wouldn't have).  Certainly food for thought.

[Dexter]

Here's a talk that Tom Gayner gave at Google.  It's excellent. 

https://www.youtube.com/watch?v=2sG91e1Wh4I